Another tax bombshell

More than RM16bil owed to taxpayers over the years, says Finance Minister

Just weeks after exposing the ‘missing’ RM19bil GST refunds, Finance Minister Lim Guan Eng revealed that excess income tax and real property gains tax amounting to RM16bil has not been refunded over a six-year period. Laying the blame squarely on the previous administration, Lim said the government will allow taxpayers to use what is owed to them to offset their current year income tax that is payable next year.

PETALING JAYA: Taxpayers who have been owed tax refunds for as long as six years can now apply to offset this against income tax that is payable for the current year.

Finance Minister Lim Guan Eng says the government is taking this unprecedented step because his ministry has discovered that the previous Barisan Nasional government had not refunded RM16.046bil in excess income tax and real property gains tax to taxpayers.

The total figure involved 1,653,786 incidents consisting of companies, individuals, societies and foundations as of May 31 this year, said Lim in a press statement yesterday.

According to him, 29% (RM4.593bil) of the total amount, which consists of RM3.09bil of tax refunds for companies and RM1.503bil for individuals, societies and foundations, had not been refunded to taxpayers for over six years.

Also, 38% (RM6.125bil) of the total amount, consisting of RM5.212bil for companies and RM913mil for individuals, societies and foundations, had not been refunded for a period of between two and three years.

And 22% (RM3.539bil) of the figure, consisting of RM2.759bil for companies and RM780mil for individuals, societies and foundations, comes from a backlog stretching back four to five years.

Finally, 11% (RM1.789bil) of the total amount, made up of RM1.356bil for companies and RM433mil for individuals, societies and foundations, had not been refunded to taxpayers over the past one year.

Lim said the outstanding tax refunds were due to a shortage of transfers from the direct tax revenue collected in the Tax Refunds Trust Fund (TRTF).

He added that the balance in the TRTF stands at RM1.486bil as of May 31 based on records from the Accountant General’s Department, much lower than the RM16.046bil required to refund taxpayers.

“In other words, there exists a shortfall of RM14.56bil as of May 31, which resulted in 1,653,786 taxpayers not receiving their tax refunds as far back as more than six years ago.

“Therefore, it is clear that the RM14.56bil, which was not transferred from the Consolidated Funds to the TRTF, had already been recognised as government revenue by the previous government.

“This means that the government revenue that was reported by the previous government is not accurate and larger than what it actually was,” Lim said.

He alleged that the arrears in tax refunds of more than six years was because the Cash Management Committee under the Finance Ministry did not allocate enough funds to the TRTF as requested by the Inland Revenue Board (IRB).

Lim added that this committee was chaired by former Treasury secretarygeneral Tan Sri Dr Mohd Irwan Serigar during Barisan’s administration.

“As I have explained before, this amounts to the falsification of accounts and the misappropriation of tax refunds for other purposes or to conceal the actual deficit and present a surplus,” he said.

Lim said the Pakatan Harapan government would allow taxpayers who had outstanding tax refunds to make an application to offset the amount against the tax payable for the current year.

He said taxpayers must apply for this reimbursement to IRB for verification and approval.

“Besides that, the remaining tax refunds will be carried out based on the ability of the government depending on its fiscal position,” he said.

Lim hopes that this would be the last of his ministry’s “mega exposés” in relation to alleged misappropriation and misuse of taxpayer’s money by the Barisan government.

On Aug 9, Lim alleged that RM17.911bil of the RM19.4bil GST tax credit since 2015 in the Refund Trust Account, which was meant to be refunded to business owners, was “robbed” by the then Barisan administration.

He alleged that only RM1.48bil was left in the Refund Trust Account. However, on Aug 13, Lim clarified that the shortfall in GST refunds actually totalled RM19.248bil, saying that the amount left in the Refund Trust Account was about RM148.6mil.

He apologised as well, claiming that it was an unintentional mistake by his officer who displaced a decimal point.

Former Second Finance Minister Datuk Seri Johari Abdul Ghani said any breach of trust should be addressed specifically to the party involved, and not made publicly.

A Bahasa Malaysia news portal quoted him as saying that the Pakatan Harapan government should lodge a police report against the previous administration on the income tax and real property gains tax controversy.

This means that the government revenue that was reported by the previous government is not accurate and larger than what it actually was. Lim Guan Eng